Colgate-Palmolive Company: the Precision Toothbrush

Colgate-Precision (CP) held the number one position in the US retail toothbrush with 23. 3% volume share in 1991; they are a global leader in household and personal care products. They currently have 2 toothbrush products in the market, but have been working on a three-year project in developing a technologically superior toothbrush into the market. This product, tentatively named Colgate Precision will be ready to be released into the market in late 1992.

However, the toothbrush market has been evolving quickly and Precision product manager Susan Steinberg needed to establish the appropriate positioning, branding and communication strategy in light of all internal and external factors that will potentially affect the business. One of the big questions Susan had to answer was: Should Precision be positioned as a niche product or mainstream product? (See Exhibit 1 for a comparison between launching the product in the niche /mainstream market) Alternative A – Precision in Niche Market

With the recent introduction of the new “super-premium” sub-category, CP has the option of revealing Precision as a niche product. Serving to the ‘therapeutic brushers’ who are in search of functionally effective products and are generally the most concerned group of consumers in regards to their oral health. This alternative poses a few strengths if chosen. First of all, there are fewer competitors in the “super-premium” market. Second, since existing CP toothbrushes participate in the “professional” and “value” market, introducing the Precision into the “super-premium” market will cause less erosion of Colgate Plus.

Third, CP can take this chance to submerge itself into the “super-premium” market since none of its existing products are in this segment. Lastly, no existing SKUs will need to be dropped if CP chooses this alternative. Despite all this, there are weaknesses to this alternative as well. Lower sales and market share is expected if Precision is positioned as a niche product. Furthermore, the “super-premium” market is an unfamiliar segment for CP to enter; hence the company has less experience handling unanticipated matters if faced with any. Alternative B – Precision as mainstream product

An alternative direction CP can pursue with Precision is to market it as a mainstream product. This positioning will have a broader appeal of being the most effective brush available on the market. In spite of this, as a mainstream product, Precision will have a lower list price that may cannibalize Colgate Plus sales. Existing SKUs will have to be dropped from the Colgate Plus line as additional production demands are needed for the Precision. What’s more, production schedule pressure will arise as production was previously intended for supplying Precision as a niche product.

Consequently, there will be inadequate supply of products to meet purchase demands. On the other hand, some executives feel that the lack of supply may drive the perception of a “hot” product in the market and can drive consumers to want to chase for the product. Alternative C – First Niche, Second Mainstream In this alternative, CP can first launch Precision into the niche market for the first year or so. As demand and sales start dropping off later on the product life cycle, Precision can move into the mainstream market.

One critical advantage of this option is that all production pressures will be lifted and there will be sufficient time to arrange and prepare for mainstream productions. In addition, initially positioning Precision as a niche product can allow CP to conquer all the therapeutic brushers first. As competitors start introducing more advanced products into the market, Precision can move into the mainstream market, targeting cosmetics brushers. Nevertheless, niche market positioning will only capture a small percentage of the market; 3% with niche vs. 10% mainstream positioning.

Critical Issues Currently a few issues are at hand and CP needs to consider these issues before going ahead with any one of the three alternatives. CP only has two toothbrushes in the market, Colgate Plus and Colgate Classic. In choosing the appropriate positioning for Precision, CP must consider product cannibalization factors. Another issue is the feasibility of production schedule. Current production schedules are initially planned for niche productions, and mainstream production requires at least a 10 month lead time, therefore, production plans must be considered.

Lastly, CP has been working over three years on the development of Precision, and this product represents a technological breakthrough in the toothbrush market. Any decisions made should take into account that the product at hand is highly superior in design and has a great deal of potential to overpower all competitive products in the industry. All points regarding the alternatives against each critical issue are discussed in Exhibit 2. Recommendations From the conclusions of the table from Exhibit 2, we can see that the optimal alternative is split between either alternative A or C.

Either alternative is able to fulfill the restraints of each critical issue. However, alternative C is a better choice than alternative A because it takes into account both the short term and long term objectives that the company should pursue. By introducing Precision into the niche market first, CP can reposition itself as the leading innovative company in the industry. Further, it is intuitive that Precision be slowly repositioned into the mainstream market as emerging competition and innovation against Precision is being introduced into the market.

This works to CP’s advantage due to the production restrictions its facing right now; hence, CP will have sufficient time to prepare itself to produce Precision as a mainstream market after its initial launch as a niche product. Ultimately, CP should pursue alternative C in the short run. In the long run, CP must continually invest in research and development to create innovative products in order to maintain its leading market position. Appendix Exhibit 1. | Niche Market| Mainstream Market|

Volume| * 15% price premium over Oral-B * expected to capture 3% of US toothbrush market by end of 1st year launch * capture 5% in year 2 * target consumers concerned about gum disease| * capture 10% of market by end of first year, and 14. 7% in year 2 * target consumers concerned about gum disease| Production Costs/Pricing| * trade price $2. 13 * introduce 4 SKUs, and no existing SKUs would be dropped * most sales from Food and Drug stores| * trade price at $1. 85 * cannibalization of Colgate Plus * pressure on production schedules developed for niche positioning * execs.

argued unsatisfied demand could creation perception of “hot” product * introduce 7 SKUs, require dropping 1 or more existing SKUs such as children’s brush from Plus Line * most sales occur through mass merchandisers and club stores| Branding (Corporate strategy: Build on Colgate Brand Equity)| – Under both niche and mainstream market, if Precision brand name stressed, cannibalization figures for Colgate Plus remains unchanged, if Colgate brand was stressed, cannibalization for Colgate Plus would increase by 20%| Communication and Promotion| – 3 million Precision brushes could be channeled through dental professionals in 1st year of launch | – 8 million Precision brushes channeled through dental professionals in 1st year of launch| Exhibit 2.

| Cannibalization of Colgate Plus| Feasibility of Production Schedule| Taking full advantage of “technological breakthrough”| FirstNiche Market| – less direct competition against Colgate Plus| – initial production schedule arrangements are for niche productions| – positioned s a niche product can target ‘market mavens’ and ‘innovators’- product that targets gum disease problems |

Second Mainstream Market| – lower price point than niche positioning; more direct competition of Colgate Plus| – requires 10 month lead time for mainstream productions, however, current production plans are for niche marketing| – introduce product as “the most effective toothbrush on the market” …but without any targeted problem solution like the niche positioning|

Third First Niche, then Mainstream| – not much cannibalization because when first introduced as niche market, less direct competition against Colgate Plus | – production schedules will be feasible as initial production only required for niche marketing, it is only later on that mainstream production is required (which fulfills 10 month lead time requirement)| – introducing as a niche product can help CP position itself as a leader in technological developments and of superior design in the toothbrush industry | Best Alternative for Critical Issue| First / Third| First / Third| First / Third|